Biz: RVCA founder’s $37 mill payday!

How much do you know about the RVCA story? It’s as odd as it is mysterious.

Two twenty-somethings start an underground surf label in 2001. One is the pro surfer, Conan Hayes, the other is a designer, Pat Tenore.

“Our relationship has always been ‘One foot in a limo, the other in the gutter,’ meaning we’ve always been fortunate enough to view and see many things that aren’t normally accessible for a pro surfer and a designer,” Tenore said at the time. Their debut range was called the “Recession Collection.”

What’s a short sale? In the US, if you’re doing it tough, a bank agrees to the sale of a home for less than the amount owed on the loan. In Conan’s case, the bank claims he fraudulently told ’em he was unemployed and broke hence the sale. The bank says it lost $586,245 on the short sale.

The prosector in the case was so zealous in hunting Conan she illegally obtain his tax records. Conan’s bail was set at exactly the amount the bank says it lost.

It gets weirder.

Pat Tenore Snr, an Orange County realtor and daddy to Conan’s former partner, facilitated the short sale. (No wrongdoing is alleged on his behalf although the prosecution is attempting to limit contact between Pat Snr and Conan.)

And, then there’s the sale of RVCA to Billabong shortly after Conan apparently sold his piece to Tenore.

What’s mysterious about the sale are the words “undisclosed amount” given for the price of the sale. And while I was digging around financial statements in the post-Quik buyout the words “RVCA Compensation” kept popping up.

So how much did Billabong pay for RVCA, a company the Wall Street Journal estimated to be worth US$50 million in mid-2013 and what was the “RVCA compensation”?

As with any good deal there was a cash amount, some targets to hit (for more cash) and a share-option grant.

But what strikes me as odd in this deal is that there appears to be no cash laid out up-front for RVCA.

All the cash (or at least the majority) was deferred till after July 1, 2015 (five years after the sale date). Those targets aren’t available for public scrutiny. I’m assuming Tenore, who is forty four, had a pretty salary, so the prospect of waiting five years for the big pay day wasn’t too tough.

On Feb 6, 2014, Tenore signed a four-year contract to remain at RVCA till 2018. With this came a slight restructure to his ‘earn out’ from the acquisition contract he signed in 2010. Pat pocketed $20 million cash, had a $7.5 million loan forgotten about (Was that the money that paid-out Conan? It ain’t clear.) and was granted 1.2 million share options in Billabong (worth about $720,000).

Over four years, the total “earn out” package, as they like to call it, looks like it was worth $37 million in guaranteed cash. A further $45 million would be earned if performance targets were hit before 2018. However, as at 31 December 2017 Billabong reported that the targets are unlikely to be met.

In 2017 Billabong wrote down the goodwill on RVCA from $78.1 million to zero.

J’Accuse: “The tour castrated Julian and Jordy!”

Is there a sadder tale than the one of Julian Wilson and Jordy Smith? Two men whose brilliance was beaten out of ’em? Two men for whom the world title beckons but remains out of reach? Yesterday, Jordy was beaten by Wade Carmichael and Julian by Pat Gudauskas, “those torrid journeymen viciously hurling sixes and sevens.”

How? Why?

Jordy and Julian, both of whom will turn thirty this year, began their tour lives at a time when progression and risk wasn’t adequately rewarded. In other words, the progressive surfing that they were known for before joining the tour had to be dramatically suppressed.

Over the years, Jordy and Julian adapted their surfing and fully embraced a castrated approach to surfing heats. As a fan, it was devastating to watch. The difference between their freesurfing and their contest surfing was so wildly exaggerated it allowed movies like Modern Collective to have the impact they did.

Surfing safe, smooth and consistent is what racked up the scores and led to world titles. Cue: Mick Fanning and Adriano de Souza.

Over the years, Jordy and Julian adapted their surfing and fully embraced a castrated approach to surfing heats. As a fan, it was devastating to watch. The difference between their freesurfing and their contest surfing was so wildly exaggerated it allowed movies like Modern Collective to have the impact they did.

The tour was for boring, athletic surfing and Kai Neville’s movies were for exciting, risky surfing.

Jordy and Julian obliged and continued to live their double lives.

Then, out of nowhere, came John John and the Brazilian Storm and the floor fell out from under them completely. Within a season, the paradigm completely shifted and the best surfing in the world, by a long shot, was happening on tour.

Jordy and Julian spent the first half of their careers reigning in the progressive aspects of their surfing only to be blindsided by the highest level of in-jersey progressive surfing ever seen by John John, Gabriel Medina and Filipe Toledo.

The saddest thing of all is that they never truly did their best surfing in a jersey.

Fanning, Parko, Slater and Andy did their best surfing during contests. Look at any of their movie parts and the level is the same while Slater pulled shit in a jersey that you would never have seen from him in a movie. The same can be said for John John, Medina and Toledo. Their heats are the ones to watch and are at least as exciting/progressive as their freesurfing clips.

Jordy and Julian have been left to wallow in the void left between Fanning/Slater and John John/Medina/Toledo. As hard as they tried, they were never able to beat Fanning at his game and sure as hell aren’t going to beat the progressive young-bloods of today, at least over the course of a season.

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NY locals plagued by “Instagram moments!”

If you were paying attention to global weather patterns this past winter then you certainly watched with interest as New York City got pounded with “bomb cyclone” after “bomb cyclone.” Weatherpeople are uniquely talented at word play. It feels as if they are able to re-brand phenomena with the greatest names thus breathing life into an otherwise staid field.

“Bomb cyclone.”

I mean, have you read or heard anything quite so… cool sounding this year? I haven’t and not even close. In case you were not paying attention, a bomb cyclone is the rapid deepening of an extratropical cyclonic low-pressure area resulting in cold, snow and waves. New York surfers rejoiced but not all was as perfect as the barreling chill pounding their shore.

Technology, you see, has destroyed their way of life. It used to be too cold to surf and so only the hardened few would have the guts to paddle out. Wetsuit technology has improved to the point of freezing cold comfort though and now the lineups are choked.

The New York Times reports:

Joe Falcone looked past the snow-covered sand to the surf and saw a fleet of humans bobbing up and down on boards. Dozens of them. His blood pumped hot with frustration.

“There were at least 50 guys just in my eyesight,” Mr. Falcone said, describing the scene as “mayhem.” He believes that surfing should be like a meditation. “But it’s hard when you’re sitting shoulder to shoulder with someone you don’t know. Out goes the intimacy between man and Mother Nature.”

Surfing Rockaway Beach in the bitter cold used to be a solitary affair, only for locals and the hard-core. But because of a boom in popularity of the sport, the gentrification of the neighborhood and advancements in wet-suit technology (a $600, five-millimeter- thick suit can keep you warm for two hours), the frigid city surf has gotten crowded, locals say.

“The newcomers are not respecting the natives,” said Mr. Falcone, a sort-of local surf icon who builds surfboards in a garage, blocks from the beach. There’s a lot of posing in Rockaway, he said. “People think of it as an Instagram moment.”

The story goes on to record the injuries sustained by the horde etc. and I very much felt Mr. Falcone and the other locals’ pain. I too grew up surfing freezing cold water. Not only were the crowds non-existent but I felt like an old-fashioned tough guy as I bobbed and froze in my two rotten 3/2s. Like Burt Lancaster. Self-delusion would not have been possible in a crowd and it makes me sad for the New York locals.

Bells, Day 4: “Torrid journeymen throwing sixes!”

Pro surfing in the post-Kelly, post-Mick era in limbo as Aussie leg fails to fire…

Doom and gloom? Not me boss. I’m a cheerful pessimist, by nature.

When this planet goes up in smoke the chosen ones will board a silver spaceship and fly mother nature’s seed to a new home in the sun.It’s just that in the post-Kelly, post-Mick, pre-wavepool era, pro surfing is in limbo. This Aussie leg is failing to fire and we, we being all of us Australian surf fans who are the bedrock of the tour who can support 3 CT’s with a population of just over 20 mill, are wondering if the ground we are standing on is solid.

“My God, these men who had love in their hearts,” Kurtz said, “had the strength… the strength to do that… if I had ten divisions of those men, then our troubles here would be over very quickly.”

Correct if wrong, but could not Sophie G solve her audience growth problems, very, very quickly if she had ten divisions of the Australian surf fan at her disposal to import across the world at will?

The American surf fan, with all due respect, is useless.

Utterly, utterly useless.

Can’t support a single CT on either Pacific or Atlantic shores. The hopped-up Okie they appointed to Ambassador of Leisure and Stoke, the great representative of middle America, disappeared without trace down god knows what Hawaiian rabbit hole. Middle America cared more, paid more attention to pro surfing in the mid-sixties when CBS network covered live the Duke Kahanomoku classic. Fact.

Kelly was the most bankable and reliable magic maker in world sport. And for a little while it seemed like John John Florence might repeat the dose, might bestride the pro surfing landscape like Genghis Khan did the Eurasian steppe, as Kelly once did. Conquering all. Vanquishing all. On our behalf. So we could be entertained and transcend our miserable little existences and forget all our flaws and deficiencies.

Being a pro surfing fan, even a reluctant one, was an easy game to play for twenty years. Lock in behind Kelly, then Andy, then Dane, or whatever member of the Coolie crew got you hard, get your mind blown, then hit it and quit while you were ahead. Ignore the back-markers unless they went deep into the draw.

Kelly was the most bankable and reliable magic maker in world sport. And for a little while it seemed like John John Florence might repeat the dose, might bestride the pro surfing landscape like Genghis Khan did the Eurasian steppe, as Kelly once did. Conquering all. Vanquishing all. On our behalf. So we could be entertained and transcend our miserable little existences and forget all our flaws and deficiencies.

But no, now we have to wade through acres and acres of over-coached torrid journeymen viciously hurling sixes and sevens at each other. At least, so far anyhow. John is no Kelly. He won’t dominate generations the way Kelly did, or maybe even Andy did. Ronnie Blakey said the new judging scale was a boon for spectators, that it made it more exciting. Ronnie, as someone who has mingled their sweat down in cattle class with the great unwashed, I know, and you know, that ain’t so.

It seemed as if judges had completely screwed the spread on the opening exchange with Wade Carmichael, handing it to Wade instead of Jordy. A second look showed Wade clearly out-powered him, and did so again to take the heat. Jordy raged against the judging scale but the brutal truth is he safety surfed, knowing safety surfing was to be penalised.”

Six heats played Lumpelstiltskin in raggedy Bells Bowl this morning beginning with Jordy and Wade Carmichael. After Jordy’s definition of flow went public I was ready to deduct a .25 for every spaz-pump he laid down between turns, but he conducted the first wave with perfect flow, throwing golden showers heavenwards on each turn.

It seemed as if judges had completely screwed the spread on the opening exchange with Wade Carmichael, handing it to Wade instead of Jordy. But in retrospect a second look showed Wade clearly out-powered him, and did so again to take the heat. Jordy raged against the judging scale but the brutal truth is he safety surfed, knowing safety surfing was to be penalised and suffered the consequences.

Bourez and Owen Wright were too good for Kolohe and Jesse Mendes. Both could be finalists or winners on current form but you’d be crazy brave to make that call based on the year to date.

I was curious to see how Fanning would be scored now that the judging panel has decreed the Fanning era over. And the answer was, as expected, low. Seabass opened up a two-point spread on the opening exchange and that really should have been a heat winning lead, based on current scoring. The crux of the heat turned on a very, very shonky used car Fanning wheeled to the front of the lot, put the keys in and convinced Zietz to drive away in, “Just give it a test drive maaaayte, great runner, comes with a free case of Balter beer and a softboard for the kids!”

Seabass bought the pup, scored a three and Fanning had nothing much more to do except ride a set wave, protect the lead with priority and enjoy the love of the victorian surf fan.

By the by, how refreshing, how relaxing to just have six heats for the morning then call the thing off? If the Wave Pool comp does nothing else than make suits reconsider format it will have been worth it. Eight hours straight of pro surfing would drive the Dalai Lama to pharmaceuticals. As it turned out, three hours, six heats, felt sublime.

Griff had plenty to say in the booth yesterday. He identified the opening turn as the one being paid most heavily by judges. Incorrectly. At Bells it’s the opening and closing turns. The primacy, recency effect. It’s the first and last things in a sequence that have the strongest effect. The things we remember, judges included.

That is no slur on Griff’s surfing despite a growing mountain of hype. He has the best closing turn on tour. As seen at Haliewa, as seen at Bells this morning. That whole-body huck will win many heats but you need something at the start to make it conclusive. Wilko put two huge turns with air drops as punctuation on a heat winning wave to put the heat away. Griff’s buzzer air-reverse was not enough but did it at least show he knew what could win.

Is Bells going to mean anything by years end? Is Snapper? The deck seems to be completely reshuffled and no one is standing on solid ground. Julian won Snapper then put on a tepid performance for the final heat of the day against Pat Gudauskas. So often he follows up something brilliant with something lame, can’t seem to produce what is needed, despite an army of cliches at his disposal for the post-heat presser and the best all round technique on tour. Is that a problem of will, of destiny or maybe some deficit that can be overcome in time?

Time that is running out. For him, for you, for the human race.

Kidding. Take a joke you misery guts!

Silver spaceships will save us all! And the Australian surf fan will be first picked to colonise space.

Just in: Kelly Slater complains about money!

There are only four certainties left in this life. The sun will rise in the morning. Guns don’t kill people, I do. Three is a crowd. And Kelly Slater hates spending money. He hates spending it, I think, on anything but really really hates spending it when he thinks he shouldn’t be. Like today for example. It is Easter Sunday in the United States of America and also April Fool’s day. I generally loathe April Fool’s jokes, especially April Fool’s surf jokes but I haven’t seen any today so am hoping that Easter mowed over the lame.

@jetstaraustralia loves thier baggage charges. Apparently the people checking you in get a kickback on what they charge you at the end of the month. Overweight charges equate to about $.50/ounce!

Just paid over $200 MEL – OOL for baggage, more than the price of my ticket… again. I’ll never learn. Just FYI, not an April Fool’s joke.

Now. $200 Australian is roughly $150 U.S. which is a smokin’ deal for a ticket from Melbourne to Coolangatta. But with smokin’ deals come nightmare headaches. I don’t know if anyone has informed Kelly yet but the low ticket price for ultra low cost regional airlines is what’s called a loss leader. It doesn’t cover the gas in the plane much less the upholstery on the seats. Those who feel they are getting a deal are soon dealt a full deck of $50 dollar charges covering everything from wearing shoes onto the airplane to breathing. I was once charged $50 for bringing a briefcase onto Jetstar and another $50 for breathing (after I passed out and my body started doing it reflexively).

I get that surfboard baggage fees can be extreme but how much does it cost to surf Surf Ranch again? Is it $10,000 for a few hours?